Wednesday, October 28, 2009

HomeLovers had an interesting interview with Arizona Republic real estate reporter Catherine Reagor recently on renter trends and issues - real life examples of what's going on in the rental market with tenants right now.

One of her questions was the current renter market - are landlords negotiating with renters or bargaining? Are they settling for lesser tenants out of sheer desperation to end a vacancy?

For some investors, this is true.

For investors that purchased a home several years ago or longer – maybe not the ideal HomeLovers property, but still an investment they are stuck with - they are desperately trying to find tenants that will pay enough to cover their mortgage, instead of renting the home for current market value.

These desperate landlords are anxious to find a tenant. To compete with cheaper rentals priced at what the market will bear, they are accepting terms, negotiations and tenants that otherwise wouldn’t be in their best interests.

These investors might be in the tough position of trying to cover their costs, instead of running the investment as a business with temporary price adjustments based on the market.

It is very important to realize that if the investor has a mortgage for $1,400 a month, they may spend months chasing that rent instead of renting it quickly at the actual market value of $1,000.

Many fail to realize they lose less money renting a year at $1,100 (a $3,600 loss) than having a six-month vacancy because they are pursuing the full $1,400 (a $8,400 loss).

To get the full $1,400, those investors end up compromising, offering dangerous incentives or not thoroughly screening prospective tenants just to end the vacancy. (Read the HomeLovers article here on "How to select the right tenant.")

Renters that find they are paying too much are the same angry renters that tend to strip or damage homes. They feel taken advantage of and take that out on the property.

It is important to realize that if a home is in rent-ready condition and priced right, there is a huge demand of good renters available.

One rule of thumb for Canadian buyers that are not paying cash? Get your financing in order BEFORE you start looking. It can take longer than you think.

Here is another important point, according to Barbara:

"Being in a different country does present its own unique challenges. Be sure that you have an agent in place here that has a team of individuals that can help with all aspects of purchasing a home including financing, insurance, accounting, etc. You don't want to be on your own for investigating and finding each professional you need via long distance."

According to the Phoenix Business Journal, part of Arizona’s appeal to Canadians is that the exchange rates have been fairly level between the U.S. and Canadian dollar.

10 Questions Canadian Buyers Should Be Asking AZ Real Estate AgentsBEFORE they decide on a long-distance partnership:

1. How many out-of-town investors have you represented?2. What is your process for selecting good investment properties?3. What is your average vacancy rate for properties you have selected for investors?4. What about for properties brought to you for property management that have already been purchased by the investor? 5. What other resources do you offer, such as insurance, mortgage, title, taxes, etc.?6. What happens when I go home?7. Give me some examples of properties you have selected for an investor, and walk me through their process start-to-finish, all the way through the signed lease.8. Give me some examples of what you think makes a good investment and why.9. What data do you have that supports your theories?

Dave Zundel has been building businesses for over 20 years, including hands-on consulting work with the owners of nearly 200 companies.

Recently, his experience allowed him to redefine residential property management and implement new levels of efficiency for a local Phoenix real estate investment and property management company, resulting in aggressive growth from 300 homes under management to nearly 2000 homes - almost a 600% increase. With a focus on numbers, Dave created tools to assist investors with avoiding purchasing mistakes, maximizing ROI and attracting ideal tenants.

In the same time frame, Dave accumulated a personal portfolio worth over $3 million that included 15 single family homes.

At age 40, Dave retired from his position as CEO to focus on his personal real estate investments. After three years in retirement, Dave could no longer resist the lure of reentering the business world. In looking at all the different types of businesses he had worked with over the years, none had more appeal to him than property management. With the luxury of hindsight, Dave was able to reflect on things that had created challenges and unhappy clients. After nurturing the idea for several months and launching a joint partnership with Mike Sargent, a dramatically improved property management model evolved.

About Mike Sargent - co-founder, real estate investorMike Sargent has personally owned and managed more than 30 investment properties, both residential and commercial, and was recently instrumental in growing a local Phoenix real estate investment and property management company into the largest property management firm in Arizona. His leadership, investment and portfolio management experience allowed him to rapidly expand the number of homes under management to 2,000 homes during his tenure.

Prior to this, Mike spent 18 years as an executive at Inter-Tel, Inc., a major public telecommunications company; and Cirillium, Inc., a hi-tech Inter-Tel spinoff, both headquartered in the Phoenix area, where he was influential in launching VoIP (voice-over Internet Protocol) to major clients worldwide by leveraging his software design engineer background, financial acumen and boardroom experience.

He is an experienced international traveler who has visited more than 30 countries. Mike has a Bachelor of Science degree in Computer Systems Engineering from Arizona State University.

About HomeLovers

To take the model of a drastically improved property management firm from an idea to fruition, Dave Zundel and Mike Sargent partnered in early 2008 to build HomeLovers, an Arizona-based property management company that specializes in residential rental properties including purchasing and managing rental property to building and growing a robust, profitable investment portfolio.

Their combined experience has allowed them to avoid predictable problems, implement technology in revolutionary ways to improve customer service and improve efficiency and profitability.

HomeLovers is rapidly establishing itself as a customer service leader in property management and today is one of Arizona's most rapidly growing home rental and property management companies.

HomeLovers is one of few property management agencies that offers its owner/investor clients instant access to real-time online accounting, documents and reporting. Ask about it today at www.homelovers.com.